Mr. Speaker, it is with great pleasure that I speak at second reading of Bill . The convention is an international treaty establishing the International Centre for the Settlement of Investment Disputes, ICSID. Bill will implement the ICSID convention for Canada.
Allow me to give hon. members of this House, first, a description of what ICSID is, second, an overview of the bill and what it does, and lastly, an explanation of the benefits of this convention for Canada and Canadian businesses.
ICSID is an organization devoted to the resolution of international investment disputes between states and nationals of other states through arbitration and conciliation.
ICSID provides mechanisms for arbitration and conciliation of such disputes provided that both the state of the investor and the host state are parties to ICSID. This means that once Canada ratifies ICSID, a Canadian investor abroad in any of the 143 countries that have already ratified ICSID may have recourse to ICSID to resolve disputes that may arise with the country in which it is doing business.
ICSID is a highly reputable World Bank institution based in Washington, D.C., and one of the most frequently used institutions for investment arbitrations.
ICSID and international investment arbitration have traditionally been used in cases of expropriation or nationalization. A hypothetical example is a takeover by a host government of a Canadian business exploiting natural resources such as oil or minerals. Such an expropriation may represent a substantial loss for the investor and fair compensation is not always easily obtained.
However, the Canadian investor may have insisted on an investment agreement with an ICSID arbitration clause before investing, or Canada may have an investment treaty with the host government making reference to ICSID arbitration. If so, once Canada ratifies ICSID, the Canadian investor owning the business will have the right to use ICSID arbitration to pursue fair compensation for its losses before an independent arbitral panel.
ICSID provides an efficient, enforceable mechanism for such dispute resolution. This is why our government believes ICSID is a good way to protect Canadian business and its investment in foreign countries. It also complements our investment protection treaties and existing arbitration clauses in investment contracts of Canadian businesses.
Bill will implement this convention. This bill needs to be passed before Canada can ratify the convention. This bill will make an ICSID award enforceable in a Canadian court. It will ensure that persons using conciliation under the convention cannot abuse that process. This bill also provides for governor in council appointments of persons to ICSID lists of potential panellists and it provides privileges and immunities as required by the convention.
The key provision making ICSID awards enforceable is clause 8, which states:
(2) The court shall on application recognize and enforce an award as if it were a final judgment of that court.
This provision will apply to an ICSID award for or against Canada or a foreign government. This provision is the key to the ICSID system for enforcing arbitration awards.
An ICSID award is reviewable by an ICSID tribunal, but not by national courts. Once final, an ICSID award will be recognized and enforced in Canada as if it is a final judgment of a Canadian court.
While Canada will be giving full effect to awards, in turn the convention guarantees similar enforcement in all states that are party to ICSID. Thus, Canadian businesses with an ICSID award in their favour have a very powerful tool to ensure the award is paid. This ensures the protection of their rights and interests in foreign countries.
There are three important related provisions. Clause 6 makes the act binding on the Crown. This ensures that awards against the federal government can be enforced.
Clause 7 prevents a party from seeking court intervention by way of judicial review applications or applications to a similar effect. A party cannot therefore attack the validity of a final ICSID award.
Clause 8 also gives all superior courts, including the Federal Court of Canada, jurisdiction to enforce ICSID awards.
The provisions with respect to conciliation are brief. Clause 10 ensures that the ICSID conciliation process can be conducted in a manner that is without prejudice to the rights of the parties. In other words, testimony given during conciliation cannot be used in other proceedings. This gives investors a further option to ensure their rights are respected.
I should also mention that the bill proposes provisions ensuring the required privileges and immunities for the centre, its employees and its arbitrators. Such immunities guarantee the independence of the tribunal when seated in Canada.
As I indicated before, once adopted, the settlement of international investment disputes act will allow Canada to ratify the ICSID Convention. In today's world, there are many situations where Canadian businesses could be significantly harmed by foreign governments' activities or decisions.
Canadian businesses are increasingly active in foreign markets. They invest in foreign countries by buying plants, establishing new businesses or acquiring rights to natural resources, for example. While disputes with foreign governments affect only a small portion of the $465 billion in assets owned by Canadian investors abroad, when disputes do arise, mechanisms such as ICSID are necessary to ensure that the dispute is resolved fairly and efficiently.
We as a government have worked hard to promote Canada abroad, facilitate the free flow of international investment and help Canadian businesses succeed abroad.
To date, Canada has negotiated 22 foreign investment protection and promotion agreements, or FIPAs, and is actively negotiating others. These agreements provide for investor state dispute settlement by means of arbitrations.
ICSID arbitration is an option under these agreements but only if both countries are party to ICSID. These agreements create a more predictable and transparent climate for Canadian investors abroad by setting out rules for the treatment of investors and offering dispute settlement to adjudicate claims when their rights have been violated.
Canadian investors who need to use dispute settlement to enforce their rights, whether those rights exist pursuant to a FIPA, an FTA or an investment contract with an arbitration clause will welcome this bill. Promoting fair trade rules and equitable treatment for our businesses must go hand in hand with efficient dispute resolution mechanisms that allow investors to obtain redress.
We have proposed this bill today to pave the way for ratification of the ICSID Convention. Canadian businesses demand that Canada join this important convention to ensure protection of their investments abroad and because it is consistent with our foreign trade investment policy.
This convention entered into force in 1966, over 40 years ago, and 143 states have ratified the convention, including most of our major trading partners. This represents virtually three-quarters of all the states in the world. By way of comparison, there are 191 states that are members of the UN.
The ICSID Convention represents one of the most ratified treaties in the world and Canada is not yet a party to it.
This government is committed to fair international trade rules. We are committed to protecting Canadians' interest throughout the world and this is why we take action today for the implementation of the ICSID Convention.
Canadian businesses support the adoption of this convention. The convention is good for investment in this country, as well as Canadian investors abroad. It ensures efficient resolution of disputes between governments and foreign investors. Those are the reasons that our government presents Bill for second reading.
Mr. Speaker, it is a pleasure to speak to Bill .
The convention is also known as the ICSID Convention. We are renowned in the House for using acronyms but it is far simpler to use that when we are referring to the International Centre for the Settlement of Investment Disputes established by the convention.
I was first made aware of ICSID by a constituent of mine, a Mr. David Haigh, an internationally renowned dispute settlement arbitrator and a lawyer with Burnet, Duckworth and Palmer in Calgary, who has long advocated for Canada to bring ICSID into force. This gentlemen brought this to my attention back in my dark days when I was in opposition. We tried at that time to bring it forward at that time but were unsuccessful. However, now that we have a new government in this country we are actually able to get on with creating a business environment that is friendly to businesses.
I know that David, along with many Canadian investors, will be pleased that the government is moving forward with Bill , and it is my pleasure to take part in the debate today.
Before a country can ratify the ICSID Convention, it needs to pass legislation providing for ICSID awards to be enforceable in its courts. For Canada, this means that it must pass and bring the act into force. In addition, any province or territory that is designated a constituent subdivision must bring similar legislation into force.
I would first like to discuss some of the pressing reasons for hastening Canada's ratification of the convention. I hesitate to use “hasten” because, as my hon. colleague just raised, we have been working on this since 1966.
There are three reasons why Canada should become a party to the ICSID Convention. It would provide additional protection to Canadian investors abroad by allowing them to have recourse to ICSID arbitration in their contracts with foreign states. It would also allow investors of Canada and foreign investors in Canada to bring investment claims under ICSID arbitral rules where such clauses are contained in our foreign investment protection agreements and free trade agreements. Also, it would contribute to reinforcing Canada's image as an investment friendly country.
I will tell the House more about the other advantages. When Canada ratifies the ICSID Convention, Canadian businesses investing abroad would finally be afforded the same level of protection as their competitors. There are numerous disadvantages associated with the absence of Canada from this convention. Canadian businesses are hurt. Even though Canadian investment abroad continues to rise, the ability of Canadian businesses to arbitrate investor state disputes is hurt by the fact that they must arbitrate without the infrastructure that ICSID would and could afford them.
Investors prefer ICSID to other arbitration mechanisms for many reasons, such as: the ICSID regime is an extremely efficient mechanism for the resolution of investment disputes; it provides better guarantees regarding enforcement of awards and more limited local court intervention; and ICSID's roster of arbitrators gives investors access to well-qualified arbitrators at ICSID at controlled rates and with extensive experience in international investment arbitration.
Since Canada has not ratified ICSID Convention, we are not granted a voice on ICSID's administrative council and cannot vote on changes to the ICSID arbitral rules.
I will turn now to the second advantage of ICSID: improving the dispute settlement process available under our treaties.
NAFTA and Canada's foreign investment protection agreements, or FIPAs, provide for ICSID dispute settlement as one of several options. However, up to now this option could not be used. Ratification of ICSID will provide investors with the option to use ICSID to resolve certain investor state disputes.
Chapter 11 of NAFTA provides that ICSID arbitrations may be used in cases where both the state of the complaining investor and the state complained against are party to ICSID. The U.S. is party to ICSID but not Mexico.
In the case of FIPA, most of our FIPA partners are already party to the ICSID convention. Consequently, when Canada ratifies the ICSID convention, arbitration using ICSID will become available under those agreements.
My final point is a simple one. Canada's absence from ICSID does little to augment our international image as a country which is open to free trade and foreign investment.
Already, as earlier mentioned, 143 countries are party to ICSID. It is time for Canada as well to become a party to ICSID. I will now explain why ratification is increasingly urgent.
First, we do not know when an investment dispute might arise in which Canadian membership in ICSID might be an important factor in preserving a Canadian investor's rights. Periodically, and again this year, we have been approached by investors who could have benefited significantly if Canada had already ratified the convention.
Second, some states that have ratified ICSID restrict enforcement of investor state arbitral awards unless such awards are made by an ICSID tribunal. It is difficult to persuade such a state to modify this practice when a solution is as simple as Canadian ratification of ICSID. Yet, until there is a solution, Canadian investors lack the protection provided by the availability of effective investor state dispute settlement mechanisms.
The Canadian business and legal communities support Canada's ratification of the ICSID convention.
The provinces and territories support ICSID. The convention allows Canada to designate provinces or territories as constituent subdivisions that will also be able to use the ICSID arbitration for disputes with international investors.
The Chamber of Commerce passed a policy resolution unanimously. Over 200 local chambers of commerce from coast to coast, at their AGM in September of 2006, passed a resolution which calls on the Government of Canada to ratify this convention.
I urge the House to listen to the call of Canada's investors, legal community and constituents like Mr. Haigh, and give expedient consideration to the bill in the interests of Canada's continuing international stature and healthy economy.
Mr. Speaker, I am pleased to participate in the debate on Bill the settlement of international investment disputes act.
Should this bill pass, it will bring Canada one step closer to becoming a signatory country of the 1965 World Bank convention on the settlement of investment disputes. The convention is designed to facilitate the settlement of investment disputes between governments and foreign investors, thereby improving the conditions for international investment, which is what has been discussed today and certainly has been reflected in the questions that hon. members have posed to the government.
Any such disputes are argued before a tribunal at the International Centre for Settlement of Investment Disputes or ICSID, as members have been referring to it. Canada signed the treaty last December in Washington and in so doing, as has been mentioned, became the 143rd country in the world to sign on.
It will not come into effect until all the provincial and territorial governments have also signed on. Five have already done that, including Ontario in 1999. It is my understanding and the government's representation that the remaining provinces and territories have expressed approval in principle and interest, and are hopefully going to be signing in the near future.
Essentially, what the ICSID convention does is ensure that the domestic courts and any of the signatory countries have the power to enforce any arbitration amounts awarded by this tribunal. Although agreeing to the hearings is voluntary on the part of each party, once they have agreed to a hearing neither one can unilaterally withdraw from the process or refuse to pay any damages awarded by the tribunal.
In order to ensure an unbiased hearing, the arbiters are selected by contesting parties themselves. The ICSID then provides the hearings with a venue and the administrative support required to facilitate them.
At this time we in the official opposition will be supporting this bill. We believe it will help to provide recourse for Canadian investors who are sometimes hurt by the actions of foreign governments when those actions violate existing trade or investment treaties.
It will also let investors around the world know that Canada is committed to honouring its international treaties on trade and investment. This sentiment was expressed by the who said in his press release of March 30:
The ICSID Convention will contribute to Canada’s prosperity by providing additional protection to Canadian investors and reinforcing Canada’s investment-friendly image abroad.
With regard to the last part of that quote, the Conservative government has kept itself very busy over the past year doing just the opposite and in fact tarnishing Canada's investment image abroad. The most glaring example was the broken promise on income trusts. This particular event caused the largest meltdown in the financial markets in the history of Canada. There was $25 billion of investment value wiped out by a broken promise.
To remind members, it was the promise of the government not to tax income trusts. In fact, the himself said that the greatest fraud is a promise not kept. That promise was not kept to Canadians. During the election campaign the said that he will never, never, never tax income trusts.
That gave assurances to the marketplace and particularly seniors, 70% of whom do not have defined pension benefit plans and, as a consequence, were looking for investment instruments that would emulate a pension plan, and that was income trusts. That meant that they could receive regular cashflows from these investments in income trusts to pay their bills. On Halloween of last year, $25 billion worth of wealth was wiped out simply by that broken promise.
This has to do with the credibility of Canada. It has to do with foreign and bilateral investment. Investors feel secure dealing with a country when they know the rules of the game and they know they are not going to be arbitrarily changed at the whim of a government for whatever reason.
I had the opportunity to participate in the public hearings before the finance committee. It was clear that foreign investment issues were very key in this regard. The change of the rules of the game in the middle of the program had damaged the credibility of Canada in terms of foreign investment.
There is no question that there will be more on this subject. Over 2 million Canadians are very angry with the government.
The finance committee heard from some of the seniors. Some members would say that they were paper losses. However, that is like me saying I paid $50,000 for my house, which is now worth $300,000. However, if my property taxes go up 31% and my house value goes down that is okay because I still have the $50,000 value or more than that. The appreciation in the house price is not a paper gain.
Anyone who held an income trust lost that kind of money. One of my own constituents lost $125,000. An 82-year-old veteran has no way of recouping that lost investment value. The credibility of the financial markets of Canada is extremely important in terms of foreign investment.
There is also another angle to this issue that has not been discussed as much in the House. I am speaking of the damage that has been done to Canada's international reputation as a safe place to invest. In the weeks following the announcement many investors were likening Canada's Conservative government to a banana republic.
I realize the term “banana republic” gets thrown around a bit. If we take the time to consider it in this instance, there are some striking parallels. The term is considered to have been coined to describe Honduras in the late 19th century and the early 20th century. At that time the Honduran government was eager to encourage as much foreign investment as possible in its agricultural sector in the hopes of improving the nation's overall economy. In particular, the government sought out investment in its burgeoning banana sector and in new railroads to support that growth.
In 1893, in order to protect local farmers, the government unveiled a new tax on banana exports that caught all those foreign investors off guard. It was the new 2¢ tax levied on every banana exported from the country. That would be almost 50¢ per banana in terms of 2007 dollars.
Needless to say, investors, particularly American investors who had invested millions of dollars in the industry under one set of rules, were not very happy when the Honduran government changed the rules in mid-game. It is exactly what I described with regard to the income trust decision in Canada, a broken promise.
This is not the 19th century in Honduras. This is Canada and we have a 21st century G-7 economy. When the leader of a G-7 country promises never to tax something, a lot of people around the world will believe him and make their investment decisions accordingly.
When the promised arbitrarily that he wanted to levy a 31.5% tax hike on the trust sectors that affected particularly seniors. It undoubtedly raised questions about Canada's image as a safe and secure place to invest. That is the crux of this. It is nice to be part of treaties, but if people break their word, if promises are broken, if the rules of the game are changed in midstream, then their credibility and integrity certainly come into question.
That is one example of where the government has dropped the ball involving foreign investment.
Let us not forget the finance minister's ever changing story on interest deductibility. We can talk about relevant issues to the security of foreign investment and the implications to that investment, the credibility of that.
Earlier when I asked a question and I wanted to put a couple of quotes on the table. I should take the opportunity to do this now.
The question of interest deductibility is another flip-flop. It is to announce one thing, disrupt the marketplace and then all of a sudden change the story. It is a moving target. It is not will I tax it, will I allow the deductibility of interest on foreign investments or will I not. Now we are talking about double-dipping and double deductibility of interest in an offshore tax haven. We are talking about tower schemes.
There is more smoke and mirrors on the interest deductibility issue simply to confuse Canadians about the facts. The facts are the government, the finance minister particularly, did not do the homework. When we look at the reaction of the market and of the key leaders in the investment community, the retired senior partner of Ernst & Young and immediate past president of the Canadian Tax Foundation, Mr. Allan Lanthier, said, “this is the single most misguided proposal I've seen out of Ottawa in 35”.
Thomas d'Aquino, president and chief executive officer of the Canadian Council of Chief Executives said:
—we are worried that the change announced in the budget may seriously undermine the competitiveness of Canada’s homegrown champions—the companies that are most active and most successful in building global businesses from head offices in Canadian communities. It may also damage Canada’s standing as an international centre for financial services.
Nancy Hughes Anthony, president of the Canadian Chamber of Commerce, said:
The proposal appears to be driven by revenue enhancement rather than a desire to build a competitive advantage....It's a real step in the wrong direction.
How about Len Farber, senior adviser at the law firm of Ogilvie Renaud, who said:
I thought this government was interested in Canadian companies having a competitive edge...This takes away that competitive edge.
What can I say? If members of Parliament cannot have their words accepted by the government, we have to look at the words of those who are responsible, the leaders within the business community, the leaders who look to having a competitive economy, to making Canada a real force not only domestically but certainly abroad.
In his March 19 budget, the minister said that he was intending to end the deductibility of interest incurred on loans to invest overseas. The budget was very clear that he meant all interest deductibility on foreign investment would come to an end by 2009.
We have gone through a litany of changes and the minister has flip-flopped on many occasions, saying that he is open to changes to the measure and the next day saying that there will not be any changes. At some point in time we have to take a decision, but when we keep changing direction, it makes it very difficult for the investment community to understand where we are.
On May 14, this past Monday, we saw the finance minister in full retreat in Toronto. He was taking advice in fact from the . We even had an opposition day to encourage and to urge the government to fix this serious mistake that would damage competitiveness in Canada. He came up with a cute slogan. He said that today the budget was known as the anti-tax haven initiative.
We can keep calling things by different names, but the fact is there is back pedalling going on, and we need some clarity. That is really important in this issue.There has to be some clarity on these important matters on which Canadian businesses make decision.
There is something particularly interesting about how this issue has played out over the past six weeks. As legislators, we know that on every decision we can always find a number of interest groups or experts who are able to support a point of view or attack a point of view. In this case, however, everyone in the country, every serious commentator on this issue, were unanimous in their condemnation of the measure. In fact, as I read in some of the quotes, they basically said that this was the single most misguided policy Ottawa had seen in 35 years.
The chair of the task force, Jack Mintz, also backed away from the government on this one. As I indicated, the president of the Canadian Council, the chief executives and the chair of the Canadian Chamber of Commerce were quick to tell the government it made a mistake and to fix it before the damage is irreparable.
A minister stood alone defending the merits of the policy until last week when he said he would clarify his position. It turns out, according to the minister, that every CEO, every commentator and journalist in the country had simply misunderstood his intentions. It is hard to make that argument when the statement in the budget is as clear as clear can be.
I think it is pretty clear to all Canadians that the is in full retreat from his original plan, thanks largely to the efforts of the leader of the official opposition who saw this was a bad policy for Canada.
It is absolutely clear, once again, that the did not think things through before acting. He tried to change the very complicated area of tax policy with a very simplistic blanket solution.
This is key. There is a pattern of not thinking things through. There are consequences and they are not linear, they are multi-dimensional. When we get situations, for instance, on income trusts, where there is a gap between the tax paid by income trusts compared to dividend-paying corporations and we close that gap so there is some equity, we want to be sure that there are no other consequences. What were the consequences? It was to tax the income trusts and not only close that gap, but actually tax it so much that we had a $25 billion meltdown.
It even gets worse than that when we look a little further down the road. Ever since the Halloween massacre of income trusts, there have been 20 or more takeovers of income trusts by private equity, a couple Canadian, but mostly foreign. Why? Because the value of these income trusts were driven down enormously. Private equities can purchase these at fire sale prices. They can structure their affairs so they do not pay taxes to Canada.
Now it gets more complicated. In fact, those 20 income trust takeovers, because their structure permits them to no longer pay Canadian taxes, will pay in a foreign jurisdiction. What is the loss of tax revenue to the Canadian government, in fact, to the taxpayers of Canada? It is $6 billion per year of tax hemorrhaging, lost revenue to the Government of Canada. The problem the said he was trying to fix was that there might be about $5 billion of tax leakage over six years. This seems to indicate the minister did not think it through.
That is the issue. We cannot take a nuclear bomb to every problem. Sometimes it takes a little thinking and a little consultation before these snap decisions are made, which have such devastating consequences not only to Canadians, but to Canada's credibility and integrity in terms of foreign investor relations.
Mr. Speaker, from the beginning the Bloc Québécois has supported Bill . Passing this bill will enable Canada to ratify the convention on the settlement of investment disputes between states and nationals of other states, and to become a member of the International Centre for Settlement of Investment Disputes, better known by its acronym, ICSID.
Bill integrates the requirements of the international convention in the laws of a country, in particular to ensure that arbitral awards are respected and to provide for the immunities required by the centre and its staff. As my colleague opposite said, ICSID was created by the World Bank by the Washington Treaty in 1965. There are currently 156 member countries. ICSID is responsible for settling disputes between a state and a foreign investor. There may be two types of conflicts. The first type are disputes over bilateral foreign investment protection treaties. The second are disputes over treaties between governments and foreign investors, for example the type that the Government of Quebec concludes regularly by eliciting foreign investments with the promise of providing electricity at an agreed price.
Canada’s membership will not have any impact on the provinces, except that they too may have recourse to the ICSID when they conclude agreements with investors. As for bilateral treaties binding the federal government to other countries, they already provide for recourse to ICSID arbitration, but not through the regular mechanism, since Canada has not ratified the convention. In fact the only thing that Canada’s membership in the centre will change is that Canada will be able to intervene in negotiations to amend the convention or the rules of the centre and it will enjoy the assurance of being able to join in the appointment of arbitration tribunals.
Ultimately the ICSID is only a tribunal. I could have said so at the beginning, but I am saying it at the end. Where there are settlement difficulties, however, the problem is not usually the tribunal, but rather the poor investment protection treaties concluded by Canada.
The Bloc Québécois, of course, supports the conclusion of investment protection agreements, as long as they are good agreements. It is completely natural for investors, before making an investment, to try and make sure they will not be divested of their property or that they will not become victims of discrimination. This is the sort of situation that foreign investment protection agreements are meant to cover. In fact this is not a new phenomenon. Agreements to protect investments have been signed by France and the United States since 1788. Today there are over 2,400 bilateral investment protection agreements around the world.
The Bloc is in favour of concluding such agreements and recognizes that they promote investment and growth. However—and it is important to say so—almost all these agreements rest on the same principles: respect for property rights regardless of the owner’s nationality; no nationalization without fair and prompt financial compensation; prohibition against treating property located on one’s territory differently depending on its owner’s origins; free movement of capital arising from the operation and the disposal of the investment.
In all cases, if there is non-compliance, states can submit a dispute respecting compliance with the agreement to an international arbitration tribunal. In most cases, investors themselves can submit disputes to an international tribunal, but only once they have got the state’s consent, and this is something to be noted. In many cases, the international arbitration provided for under the agreement takes place before the ICSID. Belonging to it, as is provided for under Bill , also means belonging to the international order in the area of investments.
In the investment protection agreements they have signed, only two countries, Canada and the United States, systematically give investors the right to apply directly to the international tribunals, and we have repeatedly spoken out against this.
This is a deviation from the norm. By allowing a company to operate outside government control, it is being given the status of a subject of international law, a status that ordinarily belongs only to governments.
The agreements that Canada signs with other countries contain a number of similar deviations, giving multinational corporations rights that they should not have and limiting the power of states to legislate and take action for the common good.
We said no—and we still say no—to chapter 11 of NAFTA. That chapter of NAFTA, the trade agreement between the United States, Canada and Mexico, deals with investments and provides that a dispute can be taken to ICSID. That chapter is a bad agreement in three respects.
The definition of expropriation is so vague that the slightest government action—other than a general tax provision—can be challenged by a foreign investor if it reduces the profits from its investment. For instance, a plan to implement the Kyoto accord that forced the oil companies, the big polluters, to pay large sums could be challenged under chapter 11 and result in the government paying them compensation.
Let us remember that the Alberta oil companies are mainly owned by American interests. Chapter 11 could open the door wide to the most abusive proceedings.
Second, the definition of investor is so broad that it includes any shareholder. This means that virtually anyone can bring proceedings against the state and seek compensation in relation to a government action that allegedly reduced a company’s profits.
Third, the definition of investment is so broad that it even includes the profits an investor hopes to earn from its property in future. In expropriation cases, not only is the state then forced to pay the fair market value, but it must add the amount of the income that the investor anticipated earning in future. In that case, it would no longer be possible to nationalize electricity as was done in Quebec in the 1960s.
The dispute resolution mechanism allows corporations to apply directly to the international tribunals to seek compensation, without even getting the consent of the state—if they do, without going through the dispute resolution mechanism under the agreements signed in NAFTA.
How is it conceivable that a multinational corporation could, on its own authority, create a trade dispute between two countries? And yet this is the absurd situation that the investment chapter of NAFTA, chapter 11, permits.
Because of these flaws, chapter 11 of NAFTA reduces the state’s capacity to take action for the common good, to legislate about the environment, and is a sword of Damocles that could come fall at any moment on any legislative or regulatory measure that might reduce corporate profits.
In 2005, the United States changed some of the provisions in their model investment protection agreement. In 2006, Canada followed suit, thus agreeing that they were extreme.
Since both countries have now acknowledged the harmful nature of chapter 11 of NAFTA, the time is ripe for the government to move quickly to initiate discussions with its American and Mexican partners to amend chapter 11 of NAFTA. It is important to bring this up now. Obviously, therefore, we are saying no to bad investment protection agreements.
In addition to chapter 11 of NAFTA, and although its extreme nature has been widely decried, the government has entered into 16 other bilateral foreign investment protection agreements, and all are identical. All those foreign investment protection agreements—sometimes called FIPAs—are bad and should be renegotiated.
In 2006, the government more or less acknowledged that these agreements were bad. It copied the changes made by the Bush administration the previous year.
Indeed, the Conservative government made some amendments to its FIPA program to correct the most glaring weaknesses. For example, they clarified the concept of expropriation by specifying that a non-discriminatory government measure that seeks to protect health and the environment or promote a legitimate government objective should not be considered as expropriation and should not automatically generate compensation. It is too early to evaluate the final effect of that clarification, but at first glance, it seems to be an improvement and we salute that.
It also restricted the concept of investment by specifying that the value of a good is equal to its fair market value. That put an end to the folly that added together all the potential profits that an investor hoped to earn from an investment. As for the rest, the model investment protection agreement continues to be based on Chapter 11 of NAFTA.
In our opinion, the government must continue to improve this model agreement, especially in terms of dispute settlement mechanisms. Multinational corporations must be brought under the authority of the state, like any other citizen.
Before ending my remarks, I want to emphasize that the government must submit treaties and international agreements to the House of Commons before ratifying them. At the beginning of the year, the government issued a news release to announce that it had just ratified a new foreign investment protection agreement with Peru. It was only by reading that news release that parliamentarians and the public became aware of this agreement. Parliament was never informed and never approved it. That is completely anti-democratic.
During the last election, however, the Conservative election platform was clear: the Conservatives made a commitment to submit all treaties and international agreements for approval before ratifying them. Since the Conservatives came to power, Canada has ratified 24 international treaties.
Apart from the amendments to the NATO treaty, which were the subject of a brief, last-minute debate and vote, none of these international treaties were submitted to the House. Today, international agreements have an effect of our lives that is comparable to the impact that the law can have on the lives of the citizens of all the countries with which Canada has signed bilateral agreements. There is no way to justify these treaties being concluded unilaterally and stealthily by the government, going over the heads of the representatives of the people.
The Bloc Québécois has introduced bills in the past to restore democracy and ensure the respect of Quebec and provincial jurisdictions in the conclusion of international treaties. Since the government promised to do this, we did not bring the issue up again at the time.
We are now seeing that the word of the Conservatives is not worth very much. The Bloc Québécois will raise this issue again and will bring forward proposals to restore democracy in the conclusion of international treaties. Such proposals will include requiring the government to present to the House all international treaties and agreements it has signed before ratifying them, requiring the government to publish all international agreements by which it is bound, requiring the vote and approval of the House following an analysis by a special committee tasked with examining international agreements and major treaties before the government may ratify them, and calling on the government to respect Quebec and provincial jurisdictions in the entire process of concluding treaties, that is, all stages of negotiation, signing and ratification.
I repeat, the Bloc Québécois is in favour of Bill , which will open the door to signatory countries and foreign investors with which agreements have been signed. However, ICSID is a tribunal that simply hands down decisions regarding agreements. I would like to emphasize that, based on the principles of Chapter 11 of NAFTA, the 16 bilateral agreements signed by Canada are all bad agreements and that, unfortunately, even direct access to the ICSID tribunal could not replace the agreements that would be good for the countries with which we are signing them.
Mr. Speaker, I am pleased to speak to Bill . As I understand it, the purpose of the bill is for Canada to implement the provisions of the international convention on the settlement of investment disputes.
I was not able to be here when the secretary of state introduced the bill and she may have addressed one of my questions that I posed to one of the Liberal members speaking to the bill. However, I reiterate the question because it seems to me it is something on which it is important for us to have some understanding. It has to do with the fact this convention has been open for signature for literally 42 years, from March 18, 1965 to this day. The obvious question that arises is, why now? What is the reason that today the government is proposing that something that has been on the books internationally and available for Canada to sign on to for years is suddenly a matter of sufficient importance and urgency to bring it forward in this Parliament?
In the absence of understanding that, I have proceeded to try to make sense out of the bill. I want to make it clear at the outset that the members of the New Democratic Party will not be voting to support Bill at this time. We have a number of concerns. I will try in the time available to me to summarize those concerns in three categories, first, with respect to matters of transparency, second, the issue of accessibility and third, matters of accountability. We find that this proposed agreement fails to meet the minimal test that we think is appropriate for a sovereign state to be able to seek reassurances that simply are not there.
First, I will speak briefly about transparency. The international convention on the settlement of investment disputes, proposes a consent based process for settling disputes. It is a difficulty that it is specified that once the consent of a party is given, there is no provision for there to be any revocation regardless of how flawed the process may be or how many concerns may arise in terms of how the whole process is being conducted.
The dispute settlement mechanism proposed by Bill will not just adjudicate individual contracts between foreign companies and sovereign states; it will in fact become the principal international process through which other investment agreements will be interpreted and applied with binding results. Article 48(5) of the convention clearly states:
The Centre shall not publish the award without the consent of the parties.
This creates a real concern about the transparency of the process. It seems that if matters are of sufficient import to our government, or for that matter to the corporations that are a party to such processes, there needs to be the assurance of there being some transparency around what has actually transpired.
The mechanism that is being proposed will exist under the aegis of the World Bank. That is an organization with which a great many NGOs have concerns. A great many countries, particularly the poorest of the poor countries in the world have major concerns with the World Bank. The New Democratic Party has raised concerns about it as well and in fact is pleased that the foreign affairs and international development committee currently is seized with some of those concerns and is looking at the issues of transparency, accountability and accessibility.
It seems to me at the very least that the government should not be jumping ahead without a more thorough examination of some of the concerns that have been brought to our attention through the experience of respected NGOs. One such NGO is the Halifax Initiative, an organization that was established after the G-8 was held in Halifax. It has nothing to do with me or my riding specifically. There was concern that there were no adequate responses to some of these serious issues. Another of the NGOs that presented on the matter before the committee was KAIROS, a highly respected multi-faith organization which is very involved in international development work around the world.
Concerns have not only arisen around the transparency and accountability of the World Bank operation which have massive implications for countries in the south but actually about the transparency of the Canadian government's decision-making as it relates to our participation in the World Bank.
These are issues that need to be examined more carefully with more satisfactory responses before we plunge into what is proposed here in the way of signing on to a convention. If for 42 years it has not been of sufficient or adequate usage by a series of Conservative-Liberal governments and the problems of transparency still remain with respect to the World Bank, it seems to me that it would be better if we put our house in order before we proceed with this new agreement.
Let me move briefly to the issue of accessibility. The process that is set out in the ICSID, which is the international convention that we are dealing with here, does not allow for third party testimony whatsoever. No matter how adversely some communities or other citizens may be impacted by certain contentious agreements between two parties, there is no allowance for what is called in legal terms amicus curiae briefs and is very problematic except with the full consent of the two parties to the arbitration.
There are citizens, communities and probably in some cases regional interests that could be massively impacted by some of these disputed agreements. It is not acceptable to us that there is no provision for some third party testimony being brought before an arbitration hearing. Couple that with the fact that there is no requirement for the decisions and the awards to be published, it is just a further reason for not being able to support this proposed process in its current form.
Most proceedings will probably be held in Washington. There is provision for a few designated centres elsewhere around the world, but they will take place in a small number of capital cities and will be entirely inaccessible in many instances to those third parties who may have a distinct and legitimate interest in the proceedings. Therefore, there are issues about accessibility. There is no question that countries in the southern hemisphere will most likely be impacted in adverse ways around such procedures and disputes.
Third, with respect to accountability, as I have already indicated, all decisions issued through the proposed dispute mechanism will be binding. The provisions for any appeals that could be launched to such binding decisions are very narrow and minimal.
According to article 52 in Bill , annulment of a decision could only be permitted under five conditions: first, that the tribunal was not properly constituted in the first place; second, that the tribunal has manifestly exceeded its powers; third, that there was actually documented corruption in the tribunal itself; fourth, that there was a breach in the rules of procedure; and fifth, the award failed to state the reasons on which the decision was based.
Those are really very narrow legalistic provisions that would permit for any kind of appeal process whatsoever. Given the severe impact, the magnitude of the implications of decisions that may be rendered by such a dispute resolution body, when we combine the lack of transparency, the lack of accessibility with the lack of accountability, one has to be very concerned about why we need sign on to provisions that are this lacking in terms of really being transparent and accountable for its decisions.
Citizens cannot know which decisions are taken or how much their government is expected to pay in some cases where decisions are made that the government is a party to these decisions. We are talking largely about huge corporations, and in the instance of the government losing the decision, there is not even any kind of mandatory disclosure. In fact, the opposite is true.
It is not permissible for there to be disclosure of how much a government may actually be forced to pay in the event of such a decision being made that has the government, representing the people of one's country, on the losing side.
In that event, how is it possible for citizens to hold their government accountable, or foreign corporate entities for that matter? How is it possible to judge the legitimacy of ICSID decisions that are reached? I think it fundamentally erodes the democratic accountability and the transparency that needs to be obtained.
In conclusion, a great many Canadians remember, and certainly New Democrat members of Parliament remember all too well, the attempt of the previous government to plough ahead with the introduction of the multilateral agreement on investment. It was truly astounding when this came to light, it was actually a process that was so kind of clandestine and so below the radar that I remember asking questions on the campaign trail.
I hope my memory serves me correctly. It was either in 1997 during the federal election campaign or 2000, and my colleagues confirm that my first instinct was right. My memory is never perfect, I have to confess to that, but in 1997 the multilateral agreement on investments had just barely risen to public awareness and it was impossible to get any information about what this agreement was really all about.
Overwhelmingly, what we were hearing from people, the more we were able to delve into it, was that they were very concerned about the extent to which this multilateral agreement on investment would have severally curtailed the sovereign rights of states and citizens to the benefit, overwhelmingly, of large, transboundary, multinational corporations.
Had the ICSID process, the dispute mechanism that is here proposed in Bill , existed at the time and had the multilateral agreement on investment gone ahead, cases of arbitration under the multilateral agreement on investment would actually have been channelled through the ICSID. As I mentioned at the outset when I raised questions about why now, why is this so-called new Conservative government now saying it has become very important for us to move ahead with this when it has been available for signature for 42 years, one really has to consider the adverse implications that would have accrued to Canada had we found ourselves in the situation of the MAI having gone ahead.
Thank goodness Canadians were not prepared for that to happen, but had it gone ahead it would have become subject to this disputes mechanism body with all the additional concerns that I have already raised.
With those reservations, the NDP has reached the conclusion that this is not a piece of legislation that we can support. We would have no recourse for arbitration decisions that would seriously erode the sovereign authority of the Canadian state had MAI gone into existence. We would have had no say whatsoever in the course of proceedings.
These are not light matters. These are not casual concerns. The ICSID process, while not substantive in itself, in our view has the very dark and worrisome potential to make bad financial investment agreements even worse. As I indicated at the outset, the New Democratic Party members of Parliament will not be voting for Bill .
Mr. Speaker, I will be splitting my time with my colleague, the member for .
I am pleased to have the opportunity to further explain Bill , which implements Canada's obligation under the Implementation of the Convention on the Settlement of Investment Disputes.
Canada signed the ICSID convention on December 15, 2006. That signature was a public undertaking that Canada intended to pass legislation so we could ratify the convention. This bill is the fulfillment of that undertaking. I will say more later in my speech about the ratification of the convention.
The ICSID is an important convention for protecting investment around the world. ICSID awards can already be enforced in 143 countries. It is time to provide the benefit of ICSID to Canadian investors. However, to gain that protection for Canadian investors, Canada needs legislation to ensure that ICSID awards, wherever they are made, can be enforced in Canada.
Canada also needs to provide the privileges and immunities needed for ICSID to function in Canada. We need to ensure that persons using conciliation under the convention cannot abuse that process. Canada needs to ensure that it can appoint qualified persons to ICSID panels.
Previous speeches have provided an overview of the bill and its provisions dealing with enforcement. I will focus in this speech on privileges and immunities, conciliation and appointments to the panel.
Let me begin with privileges and immunities. The privileges and immunities provided for in this bill do not deal with the privileges and immunities of the foreign governments against which an award is made. Those privileges and immunities will continue to be governed by the Foreign Missions and International Organizations Act.
Instead, clause 5 of the bill deals with the privileges and immunities of the ICSID and of individuals working for the centre or engaged in ICSID arbitration. Generally, clause 5 simply faithfully incorporates into Canadian law the privileges and immunities which the convention requires.
ICSID is provided with the legal capacity of a private person. This means it will be able contract, acquire property and institute legal proceedings. ICSID will be immune from legal process except when it waives this immunity.
Officers and employees of ICSID and people acting as conciliators or arbitrators will also be immune from legal process, but their immunity is limited. They will have immunity only for acts they have done in the exercise of their functions and only if the ICSID does not waive this immunity.
If they are not Canadians, these people are entitled to the same immunities and immigration restrictions, registration requirements and national service obligations as Canada extends to representatives, officials and employees of comparable rank of other states. The same rules apply to foreign exchange and travel restrictions.
These rules would also apply to people appearing in ICSID proceedings as parties, agents, counsel, advocates, witnesses or experts. However, this immunity is generally limited to the period when they are travelling to and from the place where the proceedings are held and for the period of their stay there.
There is nothing new or unusual in the privileges and immunities which the convention and the bill provide to individuals. Immunity from legal process is limited to functional immunity. As to other privileges and immunities, Canada only needs to provide them on the same basis as it provides to officials of other states.
All Canada's policies that apply to the extension of such privileges and immunities to officials of foreign states will also apply to the privileges and immunities provided to people under this bill.
I should also note that ICSID does not have to pay taxes or customs duties. Canadian may also not levy taxes on the salary or benefits of ICSID staff members who are not Canadians. Similarly, Canada will not tax ICSID conciliators or arbitrators who do their work in Canada if the only basis for such tax is that the work was done in Canada.
These tax privileges, like other privileges and immunities, are exclusively related to ICSID and its activities. They do not limit Canada's ability to tax Canadians. Indeed, if ICSID arbitrations and conciliations are not conducted in Canada, these tax privileges have almost no revenue impact.
I turn next to clause 10, the portion of the bill that deals with conciliation.
In addition to arbitration, ICSID also provides a conciliation process for investor state disputes. Conciliation is a process in which the parties to the dispute use a third party to clarify issues and to try to bring about agreement between them on mutually accepted terms. If the disputing parties reach agreement, the third party prepares a report explaining the issues and the agreement reached by the parties.
Conciliation can only work if both the investor and the state can speak honestly and openly to the conciliator, but conciliation can break down. For conciliation to work, the parties and the conciliator have to be able to say things that might be damaging admissions in any subsequent court action or arbitration.
The convention deals with this problem by requiring parties to the convention to ensure that what is said or written in an ICSID conciliation process will not be used in any subsequent proceeding. Clause 10 implements this obligation.
I now turn to clause 11, which provides for the governor in council to designate persons to the ICSID panel of conciliators and the ICSID panel of arbitrators.
Articles 12 to 16 of the convention set up two panels, one for conciliators, one for arbitrators. Each state party to ICSID may designate four persons to each panel and the ICSID secretary general may also appoint ten. Panel members serve for renewable terms of six years, but continue in office until their successors are designated. People designated to panels must have recognized competency in the fields of law, commerce, industry or finance.
Articles 31 and 40 of the convention provide that if the secretary general of ICSID is required to appoint the chairman of a conciliation commission or an arbitral tribunal, he must select the chairman from the relevant panel. However, the parties to the dispute are free to appoint conciliators or arbitrators from outside the panel and may well agree on a chairman.
Being named to the panel provides no remuneration. Historically, the chances of a panellist actually being asked to arbitrate or conciliate a case are quite small. This is because there have only been 118 cases decided by the ICSID arbitral tribunals and 5 conciliation reports issued over the last 40 years. Therefore, only 118 arbitrators have been appointed to chair arbitral panels and only 5 conciliators have been selected to chair conciliation commissions. Remember as well that the parties can appoint a chairman from outside the panel.
Once this bill is declared in force in Canada, Canada will be in a position to ratify the ICSID convention. The convention also permits us to designate provinces and territories as entities that could use ICSID arbitration.
Some provinces with an interest in the convention still have concerns about the implementation and operation of the convention. We are working with the provinces and territories to resolve such concerns.
Canada can designate a province or a territory under the convention at the same time as the ratification or at any time later.
I urge the House to consider this bill on an expeditious basis. One hundred and forty-three countries are already party to the ICSID convention. Canadians with investments abroad are asking us to make the ICSID option available to them. It is time to act.
Mr. Speaker, it gives me great pleasure to rise today in this House to express my support for the bill that was described so well by my friend from , the Secretary of State for Foreign Affairs, International Trade and Sport, and also by my friend from , the Parliamentary Secretary to the Minister of Foreign Affairs.
Bill implements, in Canadian law, an international convention of the World Bank, the ICSID Convention. The purpose of Bill is therefore to implement the Convention on the Settlement of Investment Disputes between States and Nationals of Other States. This convention covers arbitration and international conciliation between governments and foreign investors, what is commonly called investor-state dispute settlement.
These disputes can arise in a variety of situations, for example, when the country where the foreign investor is located passes laws that discriminate against the investor or in case of nationalizations.
International arbitration is a proven method for resolving disputes. It is a way of resolving them without resorting to the legal system. It has long been acknowledged that the parties to a dispute can resort to arbitration and the results of the arbitration process will be recognized by the courts. For example, commercial arbitration awards in Canada, that is to say between businesses, are recognized and enforced by the courts.
It is up to the parties to decide whether they want to resort to arbitration or the legal system. The flexibility that this provides is often much appreciated. In the case of the convention implemented by Bill , which we are debating today, one of the great advantages of relying on arbitration is that it denationalizes the process. I will explain what is meant by that.
When a dispute arises between a foreign investor and the host country, the investor has the option of pursuing the matter before the courts of the host country. Usually—and this would be the case in Canada, in Quebec, or anywhere else in the country—the foreign investor would be entitled to a fair and equitable hearing. The host country’s courts would not be prejudiced against the foreign investor and would reach a decision under the law. Sometimes, though, this would not happen. The court might well lean in the direction of its own government at the expense of the foreign investor, which, in a case of interest to us, could well be a Canadian company doing business abroad. I should say as well that another advantage of the arbitration process is that the parties choose the arbiters. When the matters in dispute are highly specialized, for example petroleum development or marine issues, choosing arbiters who are experts in the field can make the process more effective and result in better decisions.
The arbitration process in the ICSID Convention is therefore one of the processes that are most often used for settling disputes between investors and states. My colleagues pointed out that more than 150 countries have already signed on to this arbitration process. The Convention has been ratified and is one of the international instruments to which the largest number of states belong. What distinguishes the convention to be implemented here in Canada by this bill is the mechanism for enforcing arbitration awards. It is an effective mechanism and that will help to protect investors. This is a key advantage of the ICSID Convention.
In the great majority of cases, the losing party in arbitration will pay the award of an arbitral tribunal without the need for the successful party to take any enforcement proceedings. The same is true for investor state arbitration.
In Canada, arbitral awards, including investor state arbitral awards, are currently enforced pursuant to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards. This New York convention permits a limited review of an arbitral award by domestic courts. It allows a court to refuse to enforce an award if to do so would be contrary to public policy. In addition, it permits a state to exclude certain subjects from the application of the convention and thus from enforcement.
ICSID provides a better enforcement mechanism. It does not permit a state to exclude from dispute settlement any matter which the state has consented to submit to arbitration. ICSID awards are enforceable as if they were final decisions of a local court. This simple, efficient mechanism guarantees better protection for Canadian investors abroad.
We can also think of companies like Bombardier, the mining companies, the large consulting engineering firms and SNC Lavalin, whose head office is in Montreal.
Here are a few of the elements or clauses that make this bill an advantageous one for our businesses in Quebec and Canada.
For example clause 8 in the bill provides for the automatic recognition and enforcement of an award given by an ICSID tribunal. Such an award is recognized and deemed to be a final judgment by a superior court of Canada.
Under the same clause, any superior court of Canada may recognize and enforce awards coming under the law. The superior courts include the Federal Court. The Federal court will have the necessary jurisdiction to hear requests for recognition of awards involving the Government of Canada and awards involving foreign governments and their political subdivisions.
This same convention provides explicitly that awards are binding on the parties and cannot be subject to any judicial appeal or remedy.
Thus a foreign tribunal cannot hear a request to the effect that an ICSID arbitral tribunal has gone beyond its jurisdiction or was not properly constituted. These cases, when they are undertaken for awards other than those of the ICSID, delay resolution of the dispute and payment of damages. The convention does not allow such dilatory remedies.
Clause 7 of the bill provides that an award under the convention is not subject to any remedy, such as appeal, review and annulment in a Canadian court of justice. From this we can infer the very final effect of awards given under the convention. The decision to seek arbitration is entirely voluntary, but once the parties have agreed to it they cannot seek remedy from any other body, such as a court of justice.
The only remedies allowed in erroneous decisions are those laid down in the convention. Requests for review, interpretation or annulment of an award are heard, should the case arise, by the Secretary-General of ICSID.
Thus questions of error concerning awards cannot be submitted to national tribunals, but there remains a guarantee that erroneous awards will be remedied.
The ICSID Convention provides a good mechanism for resolving disputes and enforcing awards efficiently. This is an international instrument promoting arbitration and fair solutions for international investment disputes. This is why our government is presenting for second reading Bill , which implements the ICSID Convention here, in Canadian law.
Mr. Speaker, I am honoured to speak in support of Bill the settlement of international investment disputes act.
The International Convention on the Settlement of Investment Disputes between States and Nationals of Other States, the ICSID convention, is an international instrument sponsored by the World Bank to facilitate and increase the flow of cross-border investment. The convention establishes a mechanism to resolve investment disputes between foreign investors and the host state in which they have made their investment.
The convention entered into force on October 14, 1966. As of January 2007, as the previous speaker mentioned, 143 states had ratified the convention, making it one of the most ratified instruments in the world. The majority of Canada's trading partners are party to this convention.
Once ratified, the convention will provide additional protection to Canadian investors abroad by allowing them to include in the contracts with foreign states the option of arbitration under the convention. In addition, Canadian investors doing business in a country with which Canada has a foreign investment promotion and protection agreement will have recourse to arbitration for violations of the agreement. Becoming a party to this convention will also make Canada a more attractive destination for international investors.
As a small businessman and entrepreneur myself, I recognize that these sorts of multilateral agreements promote stability, the rule of law and confidence in the local economy.
With hugely increased trade with emerging giants such as India, Brazil, China and other countries with governance structures different from our own, it is important that Canada be part of this international convention.
I have travelled extensively to China, India, eastern Europe and elsewhere in Europe. I can see that the developing countries still have a lot of work to do when it comes to honouring those agreements. That is where this is going to be of real importance and an essential tool for Canadians who want to invest in those countries.
This is also true for Canadian investors abroad and for those international investors who choose to invest their money in Canada. I am glad that the government is moving forward with this bill.
However, the government is introducing a bill to promote cross-border investment, while at the same time it is demonstrating its complete lack of competence on this very issue. Let me summarize the government's failure to manage our economy.
There is the betrayal on income trusts. Since April 18, 2007 there have been 16 income trust takeovers, many of which have been bought by large U.S. private equity firms. Private companies will ensure that not only are these businesses no longer paying Canadian taxes, but Canadian investors will no longer receive distributions on which they are taxed.
This is of particular shame in the energy trust sector. One of the most effective investment vehicles in this country was the income trust. Over the past 20 years Canadian energy trusts have been active in buying foreign interests and repatriating foreign capital to Canada. This trend has now been reversed.
Even worse is the impact it has had on ordinary working Canadians. When we talk about ordinary working Canadians we are talking about $35 billion lost, an average of $25,000 per Canadian. My heart goes out to those seniors who are past their prime earning years, and those working families who saw their investments reduced by a staggering 25% overnight. I think people will not make their decisions based on the Conservative leader's word ever again.
The flip-flop on deductibility of interest incurred on loans used to invest overseas is another major example of how lost the Conservative Party is when it comes to managing the economy of our country.
On April 16, 2007 our along with our finance critic, the member for , called on the Conservatives to reverse these disastrous policies before more Canadian companies and jobs were lost and long term damage was caused to Canada's competitiveness in the global marketplace. The Conservatives pretended that their interest deductibility proposal was about eliminating tax havens but that is false. It was too late for the finance minister to realize it.
This policy is taking away a legitimate tool from Canadian industries that increases their competitiveness on the world stage. The tried to ignore the calls from the Liberal Party to reverse this disastrous policy but he ignored us. However, he was unable to ignore his unhappy friends on Bay Street who made it clear that the Liberal Party was right and that the Conservatives should reverse the decision.
At least the is demonstrating some judgment by flip-flopping for the good of the Canadian economy. I suppose the people of Canada have not discovered what the people of Ontario already knew when it comes to the minister's stewardship of the economy. We all remember that it was the 's provincial--
Mr. Speaker, it is my pleasure to rise in this House to express the Bloc Québécois' support for Bill .
This bill will enable Canada to ratify the Convention on the Settlement of Investment Disputes between States and Nationals of Other States and to become a member of the International Centre for Settlement of Investment Disputes.
Bill integrates the requirements of the international convention in the laws of a country, in particular to ensure that arbitral awards are respected and to provide for the immunities required by the centre and its staff. ICSID was created by the World Bank by the Washington Treaty in 1965. There are currently 156 member countries.
ICSID is responsible for arbitrating disputes between States and foreign investors. There may be two types of disputes: disputes related to compliance with bilateral foreign investment protection agreements and disputes related to agreements between governments and foreign investors. The Government of Quebec regularly signs the latter type of agreement when eliciting foreign investment with the promise, for example, of providing electricity at an agreed price.
Canada’s membership will not have any impact on the provinces, except that they too may have recourse to the ICSID when they conclude agreements with investors. As for bilateral treaties binding the federal government, they already provide for recourse to ICSID arbitration by the additional facility rules rather than the regular process, which is available only to countries that have ratified the convention.
In fact the only thing that Canada’s membership in the centre will change is that Canada will be able to intervene in negotiations to amend the convention or the rules of the centre and it will enjoy the assurance of being able to join in the appointment of arbitration tribunals. Ultimately, the ICSID is only a tribunal. The problem is not the tribunal, but rather the poor investment protection treaties concluded by Canada.
The Bloc Québécois supports the conclusion of investment protection agreements, as long as they are good agreements. It is completely natural for investors, before making an investment, to try and make sure they will not be divested of their property or that they will not become victims of discrimination. This is the sort of situation that foreign investment protection agreements are meant to cover.
This is not a new phenomenon. The first known agreement that includes foreign investment protection provisions was reached between France and the United States in 1788, or over 200 years ago. There are now over 2,400 bilateral investment protection agreements around the world. If we include tax treaties, which have to do with the tax treatment of foreign investments and revenues, that would mean some 5,000 bilateral foreign investment treaties.
The Bloc is in favour of concluding such agreements and recognizes that they promote investment and growth. Almost all these agreements rest on the same principles: respect for property rights regardless of the owner’s nationality; no nationalization without fair and prompt financial compensation; prohibition against treating property located on one’s territory differently depending on its owner’s origins; free movement of capital arising from the operation and the disposal of the investment.
In all cases, if there is non-compliance, states can submit a dispute respecting compliance with the agreement to an international arbitration tribunal. In most cases, investors themselves can submit disputes to an international tribunal, but only once they have got the state’s consent. In many cases, the international arbitration provided for under the agreement takes place before the ICSID. Belonging to it, as is provided for under Bill , also means belonging to the international order in the area of investments.
In the investment protection agreements they have signed, only two countries, Canada and the United States, systematically give investors the right to apply directly to the international tribunals.
This is a deviation from the norm. By allowing a company to operate outside government control, it is being given the status of a subject of international law, a status that ordinarily belongs only to governments.
The agreements that Canada signs contain a number of similar deviations that give multinationals rights they should not have and that limit the power of the state to legislate and take action for the common good.
We say no to chapter 11 of NAFTA. The investments chapter of NAFTA, chapter 11, provides that a dispute can go to ICSID. That chapter is a bad agreement in three respects.
The definition of expropriation is so vague that the slightest government action—other than a general tax provision—can be challenged by a foreign investor if it reduces its profits from its investment.
For instance, a plan to implement the Kyoto Accord that paid large amounts to the oil companies, big polluters that they are, could be challenged under chapter 11 and result in the government paying compensation. The Alberta oil companies are in fact mainly owned by American interests. Chapter 11 opens the door to the most abusive proceedings.
The definition of investor is itself so broad that it includes any shareholder. This means that virtually anyone can bring proceedings against the state and seek compensation in relation to a government action that allegedly reduced a company’s profits.
The definition of investment is so broad that it even includes the profits an investor hopes to earn from its property in future. In expropriation cases, not only is the state then forced to pay the fair market value, but it must add the amount of the income that the investor anticipated earning in future. In that case, it would no longer be possible to nationalize electricity as was done in Quebec in the 1960s.
Take the example of SunBelt, a company composed of a Canadian shareholder and a Californian shareholder. The business closed down when the Government of British Columbia eliminated the right to export water in bulk that it had been given. The Canadian shareholder, relying on Canadian laws, received compensation equivalent to the value of its investment: $300,000. The American shareholder, relying on chapter 11 of NAFTA, included in its claim all of its potential future earnings: $100 million. The case was settled out of court for an amount that was not disclosed.
Given the amounts of money in issue, chapter 11 is a deterrent to any government action, particularly in relation to the environment, whose effect would be to reduce the profits of a foreign-owned corporation.
As well, the dispute resolution mechanism allows corporations to apply directly to the international tribunals to seek compensation, without even getting the consent of the state.
How is it conceivable that a multinational could, on its own authority, create a trade dispute between two countries? And yet this is the absurd situation that the investment chapter of NAFTA permits.
Given these flaws, chapter 11 of NAFTA reduces the state’s capacity to take action for the common good, to legislate about the environment, and is a Damocles’ sword that could come crashing down at any moment on any legislative or regulatory measures whose effect was to reduce corporations’ profits.
In 2005, the United States changed some of the provisions in their standard form investment protection agreement. In 2006, Canada followed suit.
Since both countries have now acknowledged the harmful and extreme nature of chapter 11 of NAFTA, the time is ripe for the government to move quickly to enter into discussions with its American and Mexican partners to amend chapter 11 of NAFTA.
We say no to bad investment protection agreements. In addition to chapter 11 of NAFTA, and although its extreme nature has been widely decried, the government has entered into 16 other bilateral foreign investment agreements, carbon copies of chapter 11.
All of these foreign investment agreements are faulty and should be renegotiated. In 2006, the government recognized to some degree that these agreements were bad. Copying the amendments made by the Bush administration the previous year, the Conservative government made changes to its FIPA program to correct the most obvious shortcomings.
It clarified the concept of expropriation by specifying that a non-discriminatory government measure that is intended to protect health and the environment or to promote a legitimate government objective should not be considered as expropriation and should not automatically generate compensation. It is too soon to evaluate the real impact of that clarification, but at first glance, it looks like an improvement.
Moreover, it restricted the concept of investment by specifying that the value of property is equal to its fair market value. That put an end to the folly of adding together all the potential profits that an investor might hope to earn from an investment.
As for the rest, the standard investment protection agreement continues to be based on chapter 11 of NAFTA. The government must continue to improve this standard agreement, particularly in terms of dispute settlement mechanisms. Multinational corporations must be brought under the authority of the state, like any other citizen.
It is important that the government submit international treaties and agreements to the House of Commons before ratifying them. At the start of the year, the government sent out a news release to announce that it had just ratified a new foreign investment protection agreement with Peru. It was only by reading that news release that parliamentarians and the public became aware of this agreement. Parliament was never informed and never approved it. That is completely anti-democratic.
Yet, the Conservative platform in the last election was clear: the Conservatives made a commitment to submit all international treaties and agreements for approval before ratifying them. Since the Conservatives came to power, Canada has ratified 24 international treaties. Except for the amendments to the NATO treaty, which were the subject of a mini-debate and vote at the last minute, none of these international treaties was submitted to the House.
International agreements today have an impact on our lives that is comparable to the impact that legislation can have. Nothing can justify the government’s going over the heads of the representatives of the people and quietly and unilaterally entering into these agreements.
In the past, the Bloc Québécois has introduced bills to restore democracy and ensure that the jurisdictions of Quebec and the provinces are respected in negotiating international treaties. Given that the government has committed to doing that, we have not taken that step this time.
We can see today that the Conservatives' commitments are not worth the paper they are written on. The Bloc Québécois will therefore start bringing forward again proposals to restore democracy in the making of international treaties, including the obligation on the government to submit to the House any international treaty or agreement it enters into, before it is ratified; the obligation on the government to publish every international agreement it is involved in; approval and vote in the House on any major treaty, following consideration by a special committee on international agreements, before the government can ratify it; respect for the jurisdictions of Quebec and the provinces at every stage of the treaty-making process: negotiations, signing, and ratification.
Am I running out of time, Mr. Speaker?
The Acting Speaker (Mr. Andrew Scheer): You have five more minutes.
Mrs. Vivian Barbot: With respect to Bill more specifically, we can note the following. While it may appear complex because the Convention on the Settlement of Investment Disputes between States and Nationals of Other States is appended to it, also called the Washington treaty, Bill is relatively simple. It is only a dozen clauses on three pages, integrating into domestic law the requirements under the provisions of the Washington treaty.
Regarding arbitration and conciliation proceedings commenced after its coming into force, the bill provides, in clause 4, that the International Centre for Settlement of Investment Disputes and its personnel have the privileges and immunities, even fiscally, that it needs to operate in Canada. In clause 8, it provides for the legal recognition of arbitration awards rendered by the centre. Clause 7 prohibits, as required under the convention, proceedings before national tribunals on the substance of matters that have already been determined by the ICSID. Under clause 9, they are further prohibited from determining matters under arbitration.
These provisions may be startling in that they take away from national legislation. They are, however, pivotal to the functioning of international arbitration tribunals. Indeed, in many countries, the judicial system is not separate and independent from the political system. That is precisely why investment agreements call for neutral arbitrators.
If national tribunals were allowed to reverse arbitration awards or to have parallel proceedings on matters already under arbitration, it would be pointless to have international arbitration tribunals, and the safeguards in investment protection agreements would hardly be worthwhile.
Under clause 6, the bill makes awards binding on the federal government. This means that Ottawa would be bound by an arbitral award that might require it, for example, to provide compensation to an injured investor. Only the federal government is bound by the bill, not the provinces. In fact, apart from chapter 11 of NAFTA, which is binding on the provinces because they joined NAFTA, no bilateral agreement to protect investments is binding on the provinces.
If, for example, a province passed a measure that injures a foreign investor who is covered by an agreement to protect investments and ICSID ordered that he should be compensated, Ottawa would be responsible for paying. It may seem absurd, but that is how it is under the Constitution. The provinces are fully sovereign in their areas of jurisdiction and Ottawa cannot unilaterally arrogate one of their powers or impose obligations on them by concluding an international treaty. Anything else would amount to depriving them of powers conferred on them by the Constitution, and the courts have refused to do that.
That is why Quebec has always insisted on being closely associated with all stages of the entire process for concluding international treaties. That is the basis of the Gérin-Lajoie doctrine.
The federal government’s refusal to respect the logic of the division of powers and its wrongful arrogation of exclusive control over international relations not only hurts Quebec but is frankly dysfunctional. Once Canada ratifies this convention and joins ICSID, the provinces can do the same if they want. If they want, they can include clauses in the contracts they sign with investors providing for recourse to ICSID. Ottawa’s ratification does not impose any obligations whatsoever on Quebec or the provinces, although it does add further arrows to their quiver in their search for foreign investment.
Finally, it was the Uniform Law Conference of Canada consisting of representatives from the justice departments of all the provinces, including Quebec, and from the federal government that recommended five years ago that the federal government should join ICSID, ratify the convention and implement it. That would be the effect of Bill .
In clause 11, Bill gives the government the power to designate conciliators and arbitrators in cases involving it that fall under ICSID.
There are generally three people on the arbitral tribunals. Each country that is party to a dispute appoints an arbitrator and these two arbitrators then agree on a third, who acts as the president.
It is in light of these considerations that the Bloc Québécois supports Bill .
Mr. Speaker, I would like to thank you for allowing me to speak today to Bill .
To begin with, it is interesting that the Conservatives are introducing a bill to promote cross-border investment at a time when they are demonstrating their complete lack of competence on this very important subject matter.
It was only yesterday, the was forced by the Liberal opposition, may I add, to make a complete reversal on his ill-advised interest deductibility proposal in the budget.
Despite the government's mishandling of the Canadian economy at the domestic and international levels, it is important that Canada join the vast majority of countries in the world that have ratified ICSID. With increased trade with emerging giants such as China, India and other nations where the government structure is different from our own, it is critical that Canada be part of an international convention on the enforcement of investors' rights.
Allow me to provide a bit of historical background on ICSID to clarify the importance of this convention. I am sure my colleagues in the past have talked about this during debate, but I think it is very important to highlight this description.
The ICSID convention is an international instrument, sponsored by the World Bank, to facilitate and increase the flow of cross-border investment. The convention establishes a mechanism to resolve investment disputes between foreign investors and the host state in which they have made their investment.
Countries agreeing to the hearings do so voluntarily on the part of each party. However, once they have agreed to a hearing, neither one can unilaterally withdraw from the process or refuse to pay damages awarded by the tribunal. Thus, no longer can we be in dispute and have one side just get up from the table and walk away.
These hearings are unbiased and to ensure this, the arbitrator is selected by the contesting parties themselves. The ICSID then provides the hearings with a venue and the administrative support required to facilitate the specific meetings.
The ICSID convention entered into force on October 14, 1966. As of January 2007, 143 states had ratified the convention, making it one of the most ratified instruments in the world. The majority of Canada's trading partners are party to the convention.
Over the past decade, there has been an increasing number of bilateral trade and/or investment treaties. Since most parties involved in bilateral investment treaties refer present and future investment disputes to the ICSID, the case load of this particular process has substantially increased.
As of June 30, 2005, ICSID had registered 184 cases; more than 30 of which were pending against Argentina. As many know, Argentina's economic crisis in the late 1990s and subsequent Argentinian government measures led several foreign investors to file a case against Argentina.
Investment disputes brought under the convention are administered by the International Centre for the Settlement of Investment Disputes located in Washington, D.C.
In the last few years, the activity at the centre has soared due to increased flows of cross-border investment and the number of investment treaties that refer to ICSID arbitration. While the centre has handled 110 arbitrations in total during the first four years of its existence, there are currently 105 proceedings under way. Since its inception, the centre has established itself as a reliable and effective organization for resolving investment disputes.
Once ratified, the convention would provide additional protections to Canadian investors abroad by allowing them to include in their contracts with foreign states the option of arbitration under the ICSID convention.
In addition, Canadian investors doing business in a country with which Canada has a foreign investment protection agreement will have recourse to ICSID arbitration for violations of the agreement. Becoming a party to the ICSID convention will also make Canada a more attractive destination for international investors.
The most significant advantage of the convention is the enforcement of the arbitral awards. Unlike awards issued by other arbitration institutions, domestic courts cannot refuse to enforce decisions issued under the ICSID convention. Rather, such awards are enforceable in any country that has ratified the convention as if they were the final judgments of the courts in that state.
Canada signed the ICSID Convention on December 15, 2006, becoming the 143rd country to do so. British Columbia, Newfoundland and Labrador, Nunavut, Ontario and Saskatchewan have already adopted their own implementing legislation.
I mentioned that some provinces and territories have adopted their own implementing legislation because in order to ratify this bill all provinces and all territories must support the convention and take the necessary action to facilitate this.
It has become known that all provinces and territories have voiced their support with the principles and guidelines outlined in Bill .
What is truly the best part of this convention, though, is the fact that it is not open to interpretation. It is simple, straightforward legislation that not only our major trading partners, by and large, already agree upon, but it is the type of understanding and guidelines that many of our potential trading partners are looking for us to agree with.
By passing Bill , Parliament sends a strong signal to other countries, as well as our own investors, that Canada is serious about honouring its commitment to international treaties and trades.
In my role as the critic for international trade in the opposition, I must emphasize how important the passing of this legislation is right now. Canada, as many people have read in the newspaper, is most likely being taken to arbitration by the United States over several complaints within the softwood lumber agreement.
Despite the strength of Canada's legal position, supported by numerous decisions of international trade law tribunals and domestic courts in both Canada and the United States, the Conservative government rushed negotiations with artificial timelines to maximize political value of the agreement for the Conservative Party of Canada and not the Canadian public.
The Conservatives' electoral agenda was put ahead of the interests of the industry that is a significant element of the Canadian economy in every region of this country. It is an industry that exports over $7 billion. It is an industry that represents thousands of jobs, approximately 300,000 jobs, that are directly impacted by this particular industry.
In fact, there is a possibility that the U.S. may now use the dispute resolution mechanism to their advantage. It is possible that these consultations may not result in a satisfactory resolution. In this case, the U.S. can ask that the matter be referred to the London Court of International Arbitration. In addition, under the softwood lumber agreement, the U.S. has the immediate and unconditional right to terminate, whenever it wants, the softwood lumber agreement.
The government signed an agreement with the United States to bring an end to long-standing disputes regarding a very important and key subject matter in softwood lumber. When it did so, it agreed to throw out previous rulings from NAFTA and the WTO courts and tribunals. The current then said that this agreement would provide predictability and stability.
Who would have predicted that seven months into a seven year agreement we would be going to arbitration because the U.S. is knit-picking on issues like what constitutes a surge mechanism in B.C. and why Canada is not collecting more export charges than they should?
This is the start of consultations and possibly arbitrations. Will the U.S. next have issues with stumpage fees in Alberta as it has indicated? Is that stability? I can almost predict the next seven years of stability based on the trend of the first seven months, and it is not looking good.
With any agreement there needs to be predictability and stability, and I agree with that. While it is regrettable, and it is too late to turn back the clock on the softwood lumber agreement, now is the time that we should move forward on protecting Canadian investors.
Because Canada is not an ICSID member, Canadian investors are unable to use ICSID arbitration rules in their disputes with other foreign states, including those where Canadian investors might lack confidence in the court system.
I would not be doing my job as a critic if I did not point out that the government, in implementing this convention, would go a long way to instilling a bit of confidence in its investors. They have certainly been knocked around in the past several months by the government.
As I mentioned earlier, the government had to reverse its decision to eliminate the interest deductibility policy, which, by the way, was the worst policy to come out of Ottawa in over 35 years. It has been widely condemned across the business community by economists. The implications of doing this would have been disastrous to investors if the minister had not reversed the policy.
As bad as that was, we should not forget how much the income trust reversal hurt Canadian investors, particularly seniors. The decision to tax income trusts wiped out more than $25 billion in savings overnight and reversed a key Conservative campaign promise, a promise they had in their platform. Canadians invested their money based on this promise and their trust cost them tens of thousands of dollars on an individual basis of their hard-earned savings. Not only did the income trust reversal impact Canadian investors but it also affected our international competitiveness.
All that aside, Bill is an effective tool to help protect Canadian investors and should help to mitigate the damage done by recent government flip-flops.
As we know, the government has been slow on signing free trade agreements. According to the Department of Foreign Affairs and International Trade, China will not sign a free trade agreement or do business with a country that is not a member of ICSID. India has also ratified the convention and has entered into investment dispute settlements under the ICSID Convention with 11 countries.
As I am sure many are aware, China and India are not only the two largest countries in the world in terms of population, but they are also the fastest growing economies. As these two economies continue to grow and their labour forces become more and more skilled, greater investment will flow into these economies. China is emerging as a world player in terms of manufacturing, while India is gaining notice for its knowledge based services. As their economies become more sophisticated, they in turn will increase investment outside their borders, including investment in Canada.
Over the past 11 years, China has been the largest recipient of foreign direct investment among developing countries. Cumulative investment in China has reached almost $750 billion over the past 11 years.
Since 1991, India has embarked on a wide-ranging economic reform program that has seen increased developments in terms of trade, investment and monetary and exchange rate policies. One of the highlights of India's economic reform is its trade policy. India has systematically reduced its customs tariffs from 150% in 1991-92 to 25% in 2003-04.
Both China and India have become very forward-looking in their approaches to foreign investments. By ratifying the ICSID Convention within their respective countries, they have taken a proactive approach to protecting their investors internally and abroad.
I urge the House to pass this bill so that as a country we can move forward with signing investment treaties and trade deals that will make Canada and Canadians more prosperous and so Canadians can enjoy a high quality of life for generations to come. I think this is a very important initiative and it is well overdue.
I have expressed my concerns with the government with respect to its legacy and the first 13 months of broken promises, of hurting and damaging our competitiveness and of impairing our ability to be productive. This is one small step toward that direction and I hope the government proceeds with this in a timely fashion.
Mr. Speaker, I am pleased to take part in this debate on Bill .
Although the bill is extremely technical, it does not change much for Canada. However, it still offers an opportunity to ask ourselves about the nature of the investment agreements that have been signed by the Canadian government, and more specifically the bilateral agreements, and about the content of the North American Free Trade Agreement.
The problem lies not so much in Bill as in the agreements that we are signing, that are arbitrated under that convention.
I would note that if this bill is enacted, it will make it possible for Canada to ratify the Convention on the Settlement of Investment Disputes between States and Nationals of Other States, and will also make it possible for Canada to become a member of the International Centre for the Settlement of Investment Disputes.
As we can see, this means incorporating the requirements of the ICSID Convention into domestic law, to ensure that arbitral awards can be enforced and to provide the necessary immunities for the centre and its personnel.
The International Centre for Settlement of Investment Disputes was created, we should remember, by the World Bank, under a treaty referred to as the Washington Convention of 1965. As of today, 156 countries have ratified the convention and are members of ICSID. The purpose of the convention and the centre is to arbitrate disputes between a state and a foreign investor.
There are two possible kinds of disputes between a state and a foreign investor. There are disputes relating to compliance with bilateral foreign investment protection agreements. For example, and I believe this was mentioned earlier, we recently signed an agreement with Peru. However, hardly anyone in the government alerted us to the signing of a new bilateral investment agreement. That agreement was very quietly signed between Canada and Peru. If it results in challenges, they can be arbitrated under this convention, and by this centre.
There is a second possible type of dispute. Disputes arise regarding agreements signed by governments with foreign investors. The government of Quebec regularly signs these kinds of agreement to generate foreign investment, for example by promising to supply electricity at an agreed price.
One can think of a number of major projects carried out on the North Shore. Discussions were held and commitments were made concerning electricity rates for the aluminum sector in exchange for commitments from the companies with respect to economic benefits from second and third processing, or future investments.
As I said, Canada's membership will not have any impact on the provinces. Only the federal level will be affected, although the provinces also will have the possibility of including in agreements they might enter into with investors provisions providing for the use of the centre and the convention.
Quebec has negotiated in the past, and could do so again in the future, agreements with foreign companies involved in the exploitation or processing of natural resources for competitive electricity rates under certain conditions. In such cases, it will be necessary to ensure that the endeavours of the Government of Quebec, whose good faith I never doubt, meet all the criteria in the agreement.
I have mentioned the bilateral treaty between the federal government and Peru. This treaty already provides for the use of arbitration or the ICSID process. Canada not being a member of the ICSID, it does not have access to the regular process because it has not ratified the convention. Additional facility arbitration rules apply under such circumstances.
As we can see, nothing much will change, except that we will be able to use the regular process.
In fact, Canada's adherence to the centre and the convention will enable it to take part in negotiations to amend the convention or the centre's rules, and ensure its ability to participate in appointments to arbitration tribunals.
I believe that this is important, because we know that this centre and this sort of convention will be increasingly important not only to the economic future, but to the overall future of trading nations such as Canada and Quebec.
In the final analysis, the centre is just a tribunal, and in that respect, we do not have a problem with Bill . What we have a problem with is not the tribunal, but the poor treaties Canada has signed to protect investments. In our view, it is only natural that there should be investment protection agreements, provided that those agreements protect certain rights, especially the sovereign rights of the states involved, whether the agreements are between states or between states and companies.
It is only natural for investors to try and make sure that they will not be divested of their property and that they will not become victims of discrimination. This is the sort of situation that foreign investment protection agreements are meant to cover. They are not a new phenomenon, but have been around for more than two centuries now. In 1788, France and the United States signed an agreement to protect foreign investments. Today, there are 2,400 bilateral investment protection agreements in the world. If we add tax treaties covering the tax treatment of foreign investments and foreign source income, there are roughly 5,000 bilateral treaties relating to foreign investments.
I spoke yesterday about Bill on foreign trusts, and I will come back to that.